Biodiesel in a Small Scale Landscape Corporation

The fuel industry has tremendously hurt many industries.  One that it directly affects is the landscape and lawn care industry.  Especially the lawn side of the business which is the division that is able to create a strong consistent weekly income.   There is a large fuel expense that is associated with the lawn side due to the weekly commute to each job.

 

Most current client’s properties were bid on when fuel prices were still reasonable several years ago.  Prices have been increased but some of the lawns are spread out, which was not an issue several years ago.  The local market is competitive enough that the customer is able to receive the services from someone else if I have to factor the lengthy commute which they are not responsible for.  This is the dilemma and biodiesel may be the answer.

 

There are several operating costs associated the making of quality biodiesel.  They include Electricity, Methanol, Catalyst, Sulfuric Acid, Water, and the Machine.  In my case there is no rent expense.  Labor is not a factor either due to the fact that the machine requires very little attention.  There are several variable expenses such as fuel cost to pick up old oil to be able to convert it to fuel oil.  These expenses can be covered by the savings on the original fuel expense.

 

The machine that is being used only requires a slight amount of human interaction. There are cheaper machines but they require a more intense labor force to monitor and run the machine. The cheaper machine retails for around $3900 and the selected BioPro 190 is $9400.   The initial investment is more but in return the company will have an industrial grade machine as opposed to a home biodiesel kit.

 

Currently the diesel fleet consists of two trucks that have 37 gallon tanks.  On an average week both trucks will go though a tank of gas, which is a total of 74 gallons a week.  Diesel is currently 4.89 a gallon, which averages to around $360 dollars a week.  The trucks are in full use for 40 weeks out of the year which yields an annual fuel cost of around $15,000.  This does not include snow removal when the trucks are usually required to run 24 hours a day for the duration of the storm.  Recently the snow business has been so lucrative it will not be factored into the equation.

 

The cost of biodiesel will work out to be around .87 cents a gallon.  An Excel program was written with inputs for all expenses to determine the price.  The truck will burn slightly more biodiesel then regular diesel.  Also, the trucks will now have to work a 10 mile radius of local restaurants to collect the used cooking oil that will later be turned into biodiesel. This will up the weekly usage of fuel.  If both trucks are ran on biodiesel, 80 gallons a week should be burned. This will be a weekly expense $69.60.  If multiplied by the operating year of 40 weeks the total fuel expense will be $2784.  This yields around a $12,000 dollar a year savings in fuel expenses alone.

 

There are also benefits when it comes time for taxes.  There are ways for tax rebates for running cleaner burning fuel as well as disposing of the used waste oil.  “The Small Agri-Biodiesel Producer Tax Credit was established as part of the Energy Policy Act of 2005.  This tax credit program is a volumetric based income tax credit for the production of agri-biodiesel (biodiesel made from first-use vegetable oils and first-use animal fats).” http://www.biodiesel.org/news/taxincentive/

 

Biodiesel is not for everyone though.  It does require you to deal with used cooking oil which is not a very clean product to handle.  Also, there are different grades and qualities of used oil.  This is something that will have to be tested prior to using the oil.  It is a very good way to save on fuel cost but if not done for a large scale may be more of a hassle then it is worth.  If you are forced to run diesel trucks for towing or any other reason it may be a great investment.

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